AFSA Raises Concerns with CT Disclosure Bill
On March 16, AFSA sent a letter to the Connecticut Joint Banking Committee raising concerns with SB 745, which would create a new set of disclosures that commercial lenders would be required to provide borrowers at the time credit is initially offered. The requirements of the bill would apply to floorplan lenders who play an integral part of the vehicle sale process by helping auto dealers finance their inventory. Floorplan financing would be classified as commercial lending under the bill, but these transactions greatly differ from standard commercial financing transactions, because floorplan lenders provide dealers with open-ended credit without a traditional payment schedule in order to accommodate the specific inventory and sales needs of dealers.
The letter argues that the bill does not adequately consider floorplan lending and could create unnecessary confusion and potential liability in standard transactions. The bill’s unnecessary addition of new disclosures would increase the compliance burden for lenders and auto dealers, ultimately leading to greater compliance costs, which could increase the cost of credit and reduce availability for Connecticut’s dealers. In order to prevent the market disruption posed by SB 745, AFSA requested that the committee amend the bill to explicitly exempt financing transactions to auto dealers, as several other states have already done.
This letter, along with SGA’s other recent letters, can be found on the direct advocacy section of AFSA’s website.
March 19th, 2021 by Dan Bucherer